A Silicon Valley fintech firm announced its money transfer service’s expansion to Canada earlier this week, but the well-heeled startup’s founder and workforce are both already firmly rooted in Kanata.
Veem’s platform allows small- and medium-sized businesses to send and receive international wire transfers in a more direct – and often cheaper – alternative to the traditional banking routes. The company has raised nearly US$70 million in venture capital to date, and its transfers are used by more than 90,000 small businesses in 96 countries.
Long active in the United States, Veem announced Wednesday that its services are now open to Canadian companies.
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The Canadian service offering is more of a homecoming for CEO Marwan Forzley, who grew up in Ottawa. He gained a profile in the local business community with his previous fintech venture, eBillMe, which was sold to Western Union in 2011. His brother, Samer Forzley, remains active in Ottawa’s tech scene as CEO of Simutech Multimedia.
While Veem has all the trappings of a Silicon Valley hotshot – cutting-edge tech, massive VC rounds and an ambitious market push – more than half of the company’s 120 employees call Ottawa home. The company’s Kanata offices, spearheaded by Forzley’s longtime business partner Sheila James, act as a Canadian HQ for the company.
“Across the board, the pools of talent are good to tap into,” Forzley said of Ottawa in a recent interview, adding that the company is in the midst of “beefing up” its operations.
Fintech innovation paying off
Forzley compares Veem’s technology to paying for a coffee. When the cashier tells you how much you owe, whether it’s a card, your phone or the coins in your pocket, “you don’t think of how you pay, you just do it,” he explains. Veem looks to simplify international wire transfers between businesses in the same way.
For SMEs sending money through a bank’s wire transfer system, the traditional process is a complicated one for all parties. Banks largely use the SWIFT system to send money through various international partners, converting a payment into different currencies and taking a fee and slice of the foreign exchange on each transaction until the funds arrive at their destination.
Veem’s first innovation was using cryptocurrency to cut down on these numerous transactions. The firm realized that it could use a digital cash such as bitcoin as a translation currency to convert CAD into another foreign denomination. Veem still makes money on a cut of the foreign exchange, but the final cost to senders can be as low as half the cost of going through banks’ SWIFT transfers.
Veem users send an email with the amount of cash to be transferred and the deal is done as soon as the recipient clicks “accept.”
“It’s like PayPal for businesses,” Forzley says.
Today, Veem’s system has evolved to offer SMEs numerous paths to send money and suggestions on which option will end up being the cheapest. Forzley says the decision is the same as price checking whether to take a bus, train or fly to your destination; whether it be through Veem’s bank accounts, via cryptocurrency or even through a traditional SWIFT transfer, the company will compare the expected costs for your money’s particular journey.
Veem isn’t playing for small pennies: Analyst firm McKinsey estimates the global payments industry will be worth $2 trillion by 2020, growing at a rate of seven per cent annually.
Forzley says that while SMEs collectively comprise a large part of this market, they’re underserved by the big banks while simultaneously being milked harder for their fees. Targeting these businesses, rather than individuals or large enterprises, gives the company a clear niche.
“We appeal to an audience that have typically been ignored by the banks,” he says.
The company is rapidly acquiring new customers, thanks in no small part to its growth capital. When the company raised its US$24-million series-B round in 2017 it had close to 17,000 accounts; today, after raising an additional US$25 million in September, it’s nearing the 100,000 mark.
Customers are finding Veem’s solution through a plug-in with existing SME solutions such as Quickbooks, but also through word of mouth. The company automatically gets a free lead every time a new business receives a payment through Veem.
In other words, the high-growth fintech firm is adhering to an old adage to grow its business: Follow the money.